Correlation Between Olympic Steel and Qualys

Can any of the company-specific risk be diversified away by investing in both Olympic Steel and Qualys at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Olympic Steel and Qualys into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Olympic Steel and Qualys Inc, you can compare the effects of market volatilities on Olympic Steel and Qualys and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Olympic Steel with a short position of Qualys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and Qualys.

Diversification Opportunities for Olympic Steel and Qualys

0.62

Correlation Coefficient

Olympic Steel  Qualys

Poor diversification

The 3 months correlation between Olympic and Qualys is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Qualys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualys Inc and Olympic Steel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Olympic Steel are associated (or correlated) with Qualys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualys Inc has no effect on the direction of Olympic Steel i.e., Olympic Steel and Qualys go up and down completely randomly.

Pair Corralation between Olympic Steel and Qualys

Given the investment horizon of 90 days Olympic Steel is expected to generate 1.4 times more return on investment than Qualys. However, Olympic Steel is 1.4 times more volatile than Qualys Inc. It trades about 0.01 of its potential returns per unit of risk. Qualys Inc is currently generating about -0.06 per unit of risk. If you would invest  3,230  in Olympic Steel on December 28, 2024 and sell it today you would earn a total of  4.00  from holding Olympic Steel or generate 0.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Olympic Steel  vs.  Qualys Inc

Olympic Steel

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Olympic Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Olympic Steel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Qualys Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qualys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Olympic Steel and Qualys

The main advantage of trading using opposite Olympic Steel and Qualys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, Qualys can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Qualys will offset losses from the drop in Qualys' long position.

The idea behind Olympic Steel and Qualys Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.